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For most of us expats, the state pension is a welcome income when we retire that provides a boost to company and private pensions. However, is working abroad stopping you from receiving as much state pension as you could? Do you understand how the new state pension works?

The new state pension was introduced for people reaching pension age from 6th April 2016 onward. It is normally calculated on your personal National Insurance (NI) contributions and you will need to have paid a minimum of 10 years of NI contributions to qualify for any state pension and 35 years to receive the maximum pension of roughly £8,000 per year. These years can be spread out over your life and don’t have to be consecutive. You can make up for the missing years to your NI record by paying voluntary contributions while you are abroad. This is usually done though Class 2 voluntary National Insurance contributions.

Let’s look at it this way:

Typical NI contributions are often as little as £11.20 per month, which equals £134 per year. To receive maximum pension allowance, these contributions are made for 35 years, therefore total you pay in is £4,704. This in return will provide you with an annual pension of £8,000 from retirement to death. Let’s say you retire at 67 and pass away at 84, your investment of £4,704 has provided you with a huge £136,000.

Track down lost pension pots 

As the number of jobs we have in our lifetimes increases, it is easy to lose track of pension pots accrued over the years. Financial advisory companies, such as deVere, provide a complimentary service to help you to track down any lost pension pots. Providing you have the name(s) of your previous employer or pension provider and national insurance number, we will be able to provide you with a full report on any UK pensions you hold. It can be well worth it if you find you’ve saved several thousand pounds that could be put to good use. One advantage of being an Expat is the options you then have with your previously frozen pension pots

Options as an Expat:

1.Death Beneficiary – this is the biggest advantage of for anyone who is married or has children. A UK pension is subject to 50% death tax when you pass away before the money moves to your spouse. Usually a UK pension cannot be passed onto children unless they are under the age of 18 at the time of death. A pension as your asset a can be passed on, in its entirety to beneficiaries of your choice. This is a massive advantage!

2. Access from 55 – should you wish to access money from your pension at any time from the age of 55 you can, this is in comparison with most UK pensions which are now age 65 and some are even higher at 67 in line with the State Pension Age.

3. Full control – It is possible to give you full control over where the pension is invested. One of the benefits of using deVere is the fact we have strategic alliances with Goldman Sachs, Morgan Stanley and UBS, three of the biggest investment banks in the world who design exclusive products for our clients.

4.25% Lump Sum – should you need access to capital you can take a tax free lump sum of up to 25% at any time. Why pay expensive loan fees/rent property when you can take a lump sum from your pension.

5.Potential Tax Benefits – as above should you want to withdraw a 25% tax free lump sum from your pension at age 55 you can. In addition, income from your pension can be taxed locally so if you are taking an income in the UAE for example, there is 0% income tax. This is a huge advantage for an expat and would save you huge amounts of UK income tax.

6. Multi-currency – should you decide you are not returning to the UK to live you may wish to flip the currency of your pension. For example, if you decide you would prefer to retire in Spain there is no point leaving your pension in GBP which would leave you vulnerable to a falling exchange rate which would impact how much you can withdraw every year

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